Correlation Between JC Chemical and Finebesteel

Can any of the company-specific risk be diversified away by investing in both JC Chemical and Finebesteel at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining JC Chemical and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JC Chemical Co and Finebesteel, you can compare the effects of market volatilities on JC Chemical and Finebesteel and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in JC Chemical with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of JC Chemical and Finebesteel.

Diversification Opportunities for JC Chemical and Finebesteel

-0.26

Correlation Coefficient

JC Chemical  Finebesteel

Very good diversification

The 3 months correlation between 137950 and Finebesteel is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding JC Chemical Co and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and JC Chemical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on JC Chemical Co are associated (or correlated) with Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of JC Chemical i.e., JC Chemical and Finebesteel go up and down completely randomly.

Pair Corralation between JC Chemical and Finebesteel

Assuming the 90 days trading horizon JC Chemical Co is expected to generate 0.71 times more return on investment than Finebesteel. However, JC Chemical Co is 1.41 times less risky than Finebesteel. It trades about 0.04 of its potential returns per unit of risk. Finebesteel is currently generating about 0.02 per unit of risk. If you would invest  375,000  in JC Chemical Co on December 26, 2024 and sell it today you would earn a total of  12,500  from holding JC Chemical Co or generate 3.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

JC Chemical Co  vs.  Finebesteel

JC Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JC Chemical Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JC Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Finebesteel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Finebesteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with JC Chemical and Finebesteel

The main advantage of trading using opposite JC Chemical and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JC Chemical position performs unexpectedly, Finebesteel can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Finebesteel will offset losses from the drop in Finebesteel's long position.

The idea behind JC Chemical Co and Finebesteel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamental Analysis module to view fundamental data based on most recent published financial statements.